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Temporary health insurance on the rise

If you are in between jobs, whether by your choice or that of your former employer, you may have discovered that acquiring reasonably priced health insurance is no easy feat. COBRA, the federal continuation health coverage plan, gives you the opportunity to continue with your previous policy, but the high premiums probably put it out of reach.

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Some people find short-term health insurance, also known as temporary insurance, to be an affordable alternative. It helps bridge the gap between having an employer-sponsored plan and having nothing at all.

Understanding short-term insurance
Leaving a job often means leaving group health coverage, a risky move if you don't have any additional insurance. "You roll the dice by going uninsured, and you can only test your luck for so long," says Renee Guariglia, executive vice president and benefit specialist at Falcone Associates Inc. in Syracuse, N.Y.

Short-term insurance products help remove the gamble by offering restricted policies. Typically, they only protect against unforeseen sickness or injury.

"It would not be a great product to buy if during your temporary time you want to just go get an annual checkup with the doctor," says David Andrews, vice president of product management at Assurant Health, a Milwaukee, Wis.-based insurance provider with a short-term insurance specialty.

"But say you have a short-term policy and you spike a fever of 103 degrees and you choose to go to the doctor. As long as it is not a pre-existing condition, the doctor's visit is covered. If the doctor prescribes you medication, that is covered. If you need to go to the hospital, that is covered. But if during that same time you say, 'I want to go get a physical because I'm thinking of running a race next month,' in most states and with most policies, that would not be covered."

Not everyone sees this insurance as a cure-all. Many policyholders believe that insurance providers are using pre-existing conditions clauses to deny legitimate claims that should be paid.

After receiving more than two dozen recent complaints about rejected claims, Connecticut Attorney General Richard Blumenthal has asked his state's insurance commissioner to audit certain insurance companies, including those that offer temporary insurance, to determine if they are refusing to pay claims based on "questionable conclusions that patients' medical conditions pre-existed their insurance policies."

Regardless of the outcome of this audit, pregant women, and people who are undergoing current treatments for chronic conditions, are probably better served with continuation coverage under COBRA.

"You usually have to be very healthy to qualify for (temporary) plans," says Philip Grisafi, a senior consultant with Mosse and Mosse Associates, an employee benefits consulting firm in Lynnfield, Mass.

Andrews says that short-term policies are restrictive by design.

"We do very limited underwriting (for temporary plans)," he says. "We are not gathering lots of information (on policyholders), so we have to be very careful about what things we are able to cover."

Facts about short-term health insurance:
Policies generally cover unforeseen illness and injury.
Coverage typically lasts from 30 days up to a year.
Pre-existing conditions are generally excluded.
Premiums are usually cheaper than insurance premiums under COBRA.
Policies are true insurance plans under government guidelines, not private "reimbursement" plans.


Next: "Approved short-term health insurance products are 'creditable.'"
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